Credit Guarantee Fund trust Scheme for Micro and Small Enterprises

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Credit Guarantee Fund Trust Scheme for Micro and

Small Enterprises

Credit Guarantee Fund Scheme for Micro and Small Enterprises.
Credit Guarantee Fund Scheme for Micro and Small Enterprises.

Introduction of Credit Guarantee Fund Trust Scheme for Micro and Small

Enterprises

Credit Guarantee Fund Scheme for Micro and Small Enterprises.
Credit Guarantee Fund Scheme for Micro and Small Enterprises.

One of the most important is the non-availability of timely and adequate loans at a reasonable interest rate by the MSE to face all problems. A major reason for the low availability of bank finance to the sector is the high-risk perception of banks in lending to MSEs and the urge for collators not readily available with these enterprises. The problem is more serious for micro-enterprises than for small enterprises and first-generation entrepreneurs. For the solving, these problems govt have famed a Credit Guarantee Fund Trust Scheme for Micro and Small Enterprises.

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To provide collateral-free loans to the MSE sector, the government of India has launched a Credit Guarantee Fund Trust Scheme for Micro and Small Enterprises as CGTMS. Both existing and new enterprises are eligible to come under this scheme. Ministry of Micro, Small and Medium Enterprises, Government of India, and Small Industries Development Bank (SIDBI) have named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). The CGTMSE was formed by GOI and SIDBI on 30 august 1990 for MSE. GCSE’s fund is being contributed by the Government of India and SIDBI in the ratio of 4: 1 respectively and includes Rs. 2477.78 crores to the Corpus of the Trust as of 31 May 2016. The corpus increased to Rs.2500 crore by the end of the eleventh plan whereas it was announced in the package for MSE.

Eligible Lending Institutions

Credit Guarantee Fund Scheme for Micro and Small Enterprises.
Credit Guarantee Fund Scheme for Micro and Small Enterprises.

Banks / Financial Institutions, which are eligible under this scheme, is Scheduled Commercial Banks (Public Sector Banks / Private Sector Banks / Foreign Banks) and select Regional Rural Banks (called ‘Sustainable Viable Category’ by NABARD). Is classified into). As of May 31, 2016, there were 133 qualified lending institutions registered as MLIs of the trust, including 26 public sector banks, 21 private sector banks, 73 regional rural banks (RRBs), 4 foreign banks, and 9 other institutions.

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Qualified credit facility by Credit Guarantee Fund Trust Scheme for Micro and Small Enterprises

Credit Guarantee Fund Scheme for Micro and Small Enterprises.
Credit Guarantee Fund Scheme for Micro and Small Enterprises.

Up to Rs. 100 lakhs per loan unit covered under the scheme to facilitate loans and/or working capital for a new or existing micro and small enterprise, without any collateral security and/or third-party guarantee. Credit Facility For those units covered under the guarantor, which may be sick due to factors beyond the control of management, extended rehabilitation assistance by the lender may also be covered under the guarantee scheme. Risks are additionally covered under a scheme operated by the government or other agencies, which will not be eligible for coverage under the scheme.

Guarantee cover

The guarantee cover available under the scheme is up to a maximum of 85% of the sanctioned amount of credit facility. Guarantee cover is up to 75% of the loan facility up to 50 lakhs (85% for loans up to Rs. 5 lakhs provided to micro-enterprises, 80% for all owned/operated by women and operated by MSEs)) of the entire amount. With a uniform guarantee at 50% if the credit risk exceeds Rs 50 lakh and up to Rs 100 lakh. In case of default, the trust claims 75% (or 85% / 80% / 50% wherever applicable) of the amount in the credit facility extended by the lending institution. For this purpose, the amount of default is given as the outstanding principal amount in the borrower’s account, in relation to the term loan, and the amount of the outstanding working capital facilities, including interest, on the date of non-account. Operation of property. (NPA).

Tenure of guarantee

Guarantee cover under the scheme is for the agreed tenure of term loan / composite credit. In the case of working capital, the guarantee cover is 5 years or a block of 5 years.

Guarantee fee

An overall all-in annual guarantee fee of 1.0% pa Approved loan facility (0.75% for loan facility up to Rs.5 lakhs and 0.85% for loans above Rs.5 lakhs and women, micro-enterprises in NER including Sikkim And up to 100 lakhs for units) is now being charged.

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Scheme Awareness Programmes

Credit Guarantee Fund Scheme for Micro and Small Enterprises.
Credit Guarantee Fund Scheme for Micro and Small Enterprises.

CGTMSE has also taken part in creating programs for CGS awareness among banks, MSE industry associations, MSE sector, etc. through print and press media, conduct workshops/seminars, participate in programs organized in various district/state / national INA. -Channel approach is adopted. . During the year, CGTMSE participated in various seminars/workshops organized by exhibitions and meetings organized by MLI and industry associations, RBI / Government. In relation to the MSE sector across the country to create awareness about CGS. CGTMSE officials held business development meetings with their member lending institutions. Continuous print media campaigns were conducted across the country to improve visibility and create awareness about the scheme. Information dissemination campaigns were carried out strictly among various stakeholders.

CGTMSE operations highlighted

As of 31 May 2016, cumulatively 24,31,490 proposals from micro and small enterprises have been approved for guarantee cover for a total loan of Rs 1,13,500.61 crore, extended by 119 active MLIs.

A year-wise guarantee approved growth position is indicated in the table below:

Period No. of Active MLIs No. of Credit Facilities Approved Amount of Guarantees   Approved (Rs. Crore) Cumulative Guarantees Approved (Rs. Crore)
FY 2000-01 9 951 6.06 6.06
FY 2001-02 16 2296 29.52 35.58
FY 2002-03 22 4955 58.67 94.25
FY 2003-04 29 6603 117.60 211.85
FY 2004-05 32 8451 267.46 538.62
FY 2005-06 36 16284 461.91 1000.53
FY 2006-07 40 27457 704.53 1705.06
FY 2007-08 47 30285 1055.84 2701.59
FY 2008-09 57 53708 2199.40 4824.34
FY 2009-10 85 151387 6875.11 11559.61
FY 2010-11 106 254000 12589.22 23846.01
FY 2011-12 109 243981 13783.98 37139.31
FY 2012-13 117 288537 16062.48 52600.07
FY 2013-14 117 348475 18188.12 70026.28
FY 2014-15 119 403422 21274.82 90445.90
FY 2015-16 119 513978 19949.38 108990.85
FY 2016-17 * 119 106634 4037.07 113500.61
*As up to 31 May 2016

courtesy MSME govt of India.

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